ILNews

Attorneys cannot agree to settlements for clients

Jennifer Nelson
January 1, 2007
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The fact a party authorizes an attorney to enter settlement negotiations and knows the negotiations are occurring does not mean that the attorney has authority to approve a settlement, according to a ruling today by the Indiana Court of Appeals.

In Carol and David Bay v. Michael Pulliam and Cardinal Transportation, LLC, 49A05-0612-CV-704, the Court of Appeals reversed a Marion Superior Court decision that granted a motion to enforce settlement agreement in favor of Pulliam and Cardinal Transportation. At issue was whether a settlement between an attorney for the Bays and Pulliam's insurance company could be binding if the Bays did not agree to it.

Carol Bay was injured during a vehicle accident involving a Cardinal truck driven by Pulliam. The company and Pulliam were insured by Zurich Insurance, North America. The Bays hired the Nunn Law Office to represent them. The settlement negotiations were between the Nunn office and Zurich, which through correspondence disclosed various settlement demands and offers of settlement from Zurich. Attorney Ken Nunn signed each demand letter, and Zurich was told to contact Claims Manager Jeff Pryor to discuss settlement. On Jan. 3, 2006, Pryor communicated with Zurich advising, "Our client has accepted your offer in the amount of $16,700." A release form was then forwarded from Zurich to the Nunn office.

Carol Bay testified in court that on Jan. 2, 2006, she told Dean Arnold, another attorney in the Nunn office, that she needed to consult with her husband before accepting the settlement offer. When the Bays received the settlement offer on Jan. 17, 2006, they rejected it in writing by noting the rejection of the settlement in two separate locations.

The Bays appealed the motion to enforce settlement agreement, arguing that the "attorney for the Bays" did not have actual or apparent authority to make the settlement agreement. They conceded the law office could enter into settlement negotiations and also that the Bays knew of such negotiations, but not that Nunn's office could agree to any settlement. The Court of Appeals agreed with the Bays argument, stating there was no evidence that Carol Bay told Arnold to accept the Zurich offer.

Pulliam maintained that Arnold had authority to enter the binding agreement per the conversation between himself and Bay on Jan. 2, in which she said she wanted to "settle the case." That is not evidence that she accepted the offer or gave Arnold authority to do so, the court ruled.

Senior Judge Sullivan wrote in the opinion, "The law is clear that retention of an attorney by a client does not constitute implied authority to settle a claim nor does it constitute a manifestation to third parties that the attorney has apparent authority to do so in an out-of-court proceeding."

Citing Gravens v. Auto-Owners Ind. Co., 666 N.E. 2d 964 (Ind. Ct. App. 1996), the court wrote, an attorney may not settle a claim without the client's consent.

In this case, Zurich assumed the Nunn office had the authority to approve the settlement, when it in fact did not, the court ruled. The acceptance of the settlement by the claims manager in the Nunn office was not binding upon the Bays. The Court of Appeals reversed the order of the Marion Superior Court and remanded for further proceedings.
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  1. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  2. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  3. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  4. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

  5. "No one is safe when the Legislature is in session."

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